Opinion: Shippers — One Carrier or Many?
By David Marx
President and CEO
This Opinion piece appears in the March 5 print edition of Transport Topics. Click here to subscribe today.
Shippers depend on trucking as the key element in meeting their transportation goals. The old slogan, “If you got it, it came by truck,” is as valid today as it was 30 years ago.
Some shippers use a single trucking company — or even a single truck and driver — to forge and maintain links in their supply chains, while others take a multiple-carrier approach. If you are a shipper, deciding which is best for you isn’t always obvious, so let the trucking firms you work with help you decide which option makes the most sense.
There are advantages for shippers in either choice — keeping the transport of cargo one-on-one or going with a group of carriers. But before making a decision, it is vital that a shipper know exactly what to expect from the trucking operations chosen. The carrier can point out what its services encompass and what they do not.
For example, does the shipper require simple transportation from point A to point B or expect a more rounded transportation package that may include multiple stops, consistent backhauls or inventory control?
The person responsible for shipping must consider carefully his or her own needs. Using these needs as guidelines — and aided by the experience and knowledge of the trucking company’s key personnel — the shipper can judge the advantages in placing surface transportation requirements with a single vendor or with multiple trucking operations.
The advantages in using a single trucking company include:
• Accountability — There’s no passing of the buck when only one company moves the freight. Mistakes from a single source can be pinpointed more easily. More important, errors can be corrected with far greater speed and a minimum of finger-pointing.
• Concentrated freight booking — With one trucker handling all of a shipper’s cargo, rather than dividing it up among a group of carriers, contract goals can be met more easily. Cost savings are maximized when only one trucking company transports the freight because higher volume almost invariably converts into lower rates.
• Easier upgrading and installing technology — Upgrading technical processes and procedures between the shipper and a single trucking concern is less involved, takes less time and is less expensive than integrating different systems among multiple truckers into the customer’s own information technology (IT) system.
• Centralized billing — The shipper’s accounting department will appreciate having to deal with only one trucker, with no more cascades of electronic or paper invoices. Adjusting charges and correcting billing mistakes are much simpler when dealing with one trucking company rather than many.
Of course, shippers also will find many advantages to using more than one trucking firm — and, again, trucking professionals will be happy to offer objective advice to their colleagues on the shipper side of the house. These advantages include:
• Greater breadth of experience and knowledge — No single trucker, as large as his operation might be, has all the answers. One trucker may have a better knowledge of a particular geographic region of the United States or Canada. Another might have a better feel for the nuances in dealing with the shipper’s consignees at a destination. Another trucking firm may have close and long-standing relationships with transportation “partners” that include railroads, ocean shipping lines and air carriers that often will carry a shipper’s freight for a significant portion of the journey to its ultimate destination.
• Meeting the shipper’s diverse needs — Within a shipper’s organization, particularly if it is a large one, separate divisions exist. Each of these divisions may require specialized knowledge and experience in transporting their particular products.
One division, for example, may require full truckload shipments almost exclusively, while another unit may send and receive predominantly less-than-truckload cargo. Other divisions may concentrate on shipping via intermodal. With a multiple-carrier approach, the shipper can use truckers with specific knowledge and skills.
• Competition among vendors — In business, competition is a positive force, and trucking is no exception. A single trucking company may become lax in handling the shipper’s freight and take that business for granted. This is particularly true in the case of a long relationship between trucker and shipper. Trucker sloth is far less likely when there is competition. Also, the shipper can exact leverage — requesting additional services and/or price concessions when the need arises.
• Reduced vulnerability — With multiple carriers handling freight, the shipper has backup in the event one of them is not meeting planned transport goals. There can be a slackening of effort or even placing freight on “cruise control” in the misguided notion we’re all one big happy family and can relax our service standards. Also, a single trucking firm may lose experienced management and drivers — or, in extreme cases, even close its doors, jeopardizing the shipper’s relationships with customers.
• Greater geographical coverage — The United States is a very big place. Even the largest trucking company can’t be in all places at all times. With multiple truckers, national coverage is far more thorough.
There also are personal reasons to consider. Is the shipper more comfortable dealing with a single trucker or with a number of them? Giving business to more than one vendor — listening to many voices instead of just one — inevitably requires greater coordination of effort and more investment in time. What begins as a clear delineation of duty may become cloudy as the arrangement lengthens. The shipper should not make the decision alone; this is the time to call in the entire management team — sales, marketing, operational and financial people — before sitting down with the carriers bidding for business. They all should share in this important logistic decision.
Skyline Freight, Jamaica, N.Y., is the trucking division of Express Air Freight Unlimited.